WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST III AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

EXHIBIT 10.6

WFN CREDIT COMPANY, LLC,

Transferor

WORLD FINANCIAL NETWORK NATIONAL BANK,

Servicer

and

THE CHASE MANHATTAN BANK

Trustee

WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST III

AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

Dated as of January 30, 1998,

and hereby amended and restated as of September 28, 2001

TABLE OF CONTENTS

 

 

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AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of January 30, 1998 and amended and restated as of September 28, 2001, among WFN CREDIT COMPANY, LLC, a Delaware limited liability company, as Transferor, WORLD FINANCIAL NETWORK NATIONAL BANK, a national banking association (“ WFN ”), as Servicer, and THE CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION, a New York banking corporation, as Trustee.

WHEREAS, World Financial Network National Bank, as transferor and servicer, and the Trustee are parties to that certain Pooling and Servicing Agreement, dated as of January 30, 1998 (the “ Existing PSA ”);

WHEREAS, the parties desire to amend and restate in its entirety the Existing PSA in order to, among other things, provide for the substitution of WFN Credit Company, LLC for World Financial Network National Bank, in its capacity as Transferor under the Existing PSA;

NOW THEREFORE, in consideration of the mutual agreements herein contained, the Existing PSA is hereby amended and restated in its entirety as follows and each party agrees as follows for the benefit of the other parties, the Holders and any Enhancement Provider to the extent provided herein and in any Supplement:

ARTICLE I DEFINITIONS

SECTION 1.1 Definitions . When used in this Agreement, the following words and phrases have the following meanings. The definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

“ Account ” means each Initial Account, each Initial Restatement Date Portfolio Account, each Automatic Additional Account and each Supplemental Account, but excludes any Account all the Receivables in which are either reassigned or assigned to Transferor or its designee or Servicer in accordance with this Agreement and any inactive Accounts which in accordance with the Credit Card Guidelines have been removed from the computer records of the Credit Card Originator. The term “Account” includes each account into which an Account is transferred (a “ Transferred Account ”) so long as (a) such transfer is made in accordance with the Credit Card Guidelines and (b) such Transferred Account can be traced or identified, by reference to or by way of the Account Schedule delivered to Trustee pursuant to Section 2.1 or 2.8(d) , as an account into which an Account has been transferred. The term “Account” includes an Automatic Additional Account or a Supplemental Account only from and after its Addition Date and includes any Removed Account only prior to its Removal Date.

“ Account Schedule ” means a computer file or microfiche list containing a true and complete list of Accounts, identified by account number and setting forth

 

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the Receivable balance as of (a) the Trust Cut Off Date (for the Account Schedule delivered on the Initial Closing Date), (b) the end of the related Monthly Period (for any Account Schedule relating to Automatic Additional Accounts), (c) September 25, 2001 for the Account Schedule relating to the Initial Restatement Date Portfolio Accounts or (d) the related Addition Cut Off Date (for any Account Schedule delivered in connection with any designation of Supplemental Accounts).

“ Acquired Portfolio Receivable ” means any receivable acquired by a Credit Card Originator from an Other Originator in connection with such Credit Card Originator’s acquisition of a portfolio of revolving credit card accounts from such Other Originator (prior to the transfer of such receivable to the Transferor).

“ Addition ” means the designation of additional Eligible Accounts to be included as Accounts pursuant to Section 2.8(a) , (b)  or (c)  or of Participation Interests to be included as Trust Assets pursuant to Section 2.8(b) or (c) , as applicable.

“ Addition Cut Off Date ” means the date as of which any Supplemental Accounts or Participation Interests are designated for inclusion in the Trust, as specified in the related Assignment. The “Addition Cut Off Date” for the Initial Restatement Date Portfolio Accounts is September 25, 2001.

“ Addition Date ” means (a) as to Supplemental Accounts, the date on which the Receivables in such Supplemental Accounts are conveyed to the Trust pursuant to Section 2.8(b) or (c) , as applicable, (b) as to Automatic Additional Accounts, the date on which such accounts are created or otherwise become Automatic Additional Accounts, (c) as to the Initial Restatement Date Portfolio Accounts, September 28, 2001 and (d) as to Participation Interests, the date from and after which such Participation Interests are to be included as Trust Assets pursuant to Section 2.8(b) or (c).

“ Additional Account ” means an Automatic Additional Account or a Supplemental Account.

“ Adjusted Invested Amount ” is defined, as to any Series, in the related Supplement.

“ Affiliate ” means, as to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For this purpose, “control” means the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and “controlling” and “controlled” have correlative meanings.

“ Agreement ” means this Amended and Restated Pooling and Servicing Agreement and, for purposes of any Series, the related Supplement.

 

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“ Amortization Period ” means, as to any Series or any Class within a Series, any period specified in the related Supplement during which a share of principal collections is set aside to repay the principal investment in that Series (excluding repayments of a Variable Interest during its revolving period).

“ Applicants ” is defined in Section 6.8.

“ Appointment Date ” is defined in Section 9.2(a).

“ Approved Portfolio ” means any Identified Portfolio and any additional portfolio that is designated as an Approved Portfolio pursuant to Section 2.8(e) , including any portfolio designated as an Approved Portfolio prior to the Effective Date pursuant to Section 2.8(e) of the Existing PSA.

“ Assignment ” is defined in Section 2.8(d)(ii).

“ Authorized Newspaper ” means any newspaper or newspapers of general circulation in the Borough of Manhattan, The City of New York printed in the English language (and, with respect to any Series or Class, if and so long as the Investor Certificates of such Series or Class are listed on the Luxembourg Stock Exchange and such exchange shall so require, in Luxembourg, printed in any language satisfying the requirements of such exchange) and customarily published on each business day at such place, whether or not published on Saturdays, Sundays or holidays.

“ Automatic Addition Suspension Date ” is defined in Section 2.8(a).

“ Automatic Addition Termination Date ” is defined in Section 2.8(a).

“ Automatic Additional Account ” means each open end credit card account in any Approved Portfolio that is established pursuant to a Credit Card Agreement coming into existence after (a) the Trust Cut Off Date (in the case of an account in the Identified Portfolio) or (b) the Addition Cut Off Date relating to the first Addition Date on which receivables from accounts in the applicable portfolio are transferred to the Trust (in the case of an account in any other Approved Portfolio) and, in either case, prior to the Automatic Addition Termination Date or an Automatic Addition Suspension Date, or subsequent to a Restart Date. In addition, accounts in an Approved Portfolio that were in existence, but were not Eligible Accounts, on (x) the Trust Cut Off Date (in the case of an account in the Identified Portfolio) or (y) the Addition Cut Off Date relating to the first Addition Date on which receivables from accounts in the applicable portfolio are transferred to the Trust (in the case of an account in any other Approved Portfolio) but which, in either case, become Eligible Accounts prior to the Automatic Addition Termination Date or an Automatic Addition Suspension Date, or subsequent to a Restart Date, shall also be “Automatic Additional Accounts” and shall be deemed, for purposes of the definition of “Eligible Account” and Section 2.8(a) , to have been created on the first day after the Trust Cut Off Date or applicable Addition Cut Off Date on which they are Eligible Accounts.

 

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“ Banc One ” means Banc One, Dayton, N.A., a national banking association.

“ Base Rate ” is defined, as to any Series, in the related Supplement.

“ Bearer Certificate ” is defined in Section 6.1.

“ Benefit Plan ” is defined in Section 6.4(c).

“ Book-Entry Certificates ” means beneficial interests in the Investor Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 6.10.

“ Business Day ” means any day other than (a) a Saturday or Sunday, (b) any other day on which national banking associations or state banking institutions in New York, New York or Columbus, Ohio are authorized or obligated by law, executive order or governmental decree to be closed or (c) for purposes of any particular Series, any other day specified in the related Supplement.

“ Certificate ” means an Investor Certificate or a certificate representing a Supplemental Interest.

“ Certificate Owner ” means, with respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency).

“ Certificate Register ” is defined in Section 6.4.

“ Class ” means any class of Investor Certificates of any Series.

“ Clearing Agency ” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“ Clearing Agency Participant ” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.

“ Closing Date ” means, as to any Series, the date on which that Series is issued.

“ Co-Branding Agreement ” means an agreement entered into by WFN with Service Merchandise, relating to the origination by WFN of MasterCard and/or VISA credit card accounts and which includes benefits for the obligors of such accounts provided by Service Merchandise.

 

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“ Collection Account ” is defined in Section 4.2.

“ Collections ” means all payments (including Recoveries of Principal Receivables or Finance Charge Receivables and Insurance Proceeds, whether or not treated as Recoveries) received by Servicer with respect to the Receivables, including In-Store Payments, in the form of cash, checks (to the extent collected), wire transfers or other form of payment in accordance with the Credit Card Agreement in effect from time to time on any Receivables. If so specified in any Supplement, Collections shall also include any payments received by Servicer with respect to Participation Interests.

“ Commission ” means the Securities and Exchange Commission.

“ Confidential Information ” is defined in Section 11.17.

“ Corporate Trust Office ” is defined in Section 11.16.

“ Coupon ” is defined in Section 6.1.

“ Credit Card Agreement ” means, as to any Account, the agreements between the Credit Card Originator that owns the Account (including WFN as assignee of an Other Originator) and the related Obligor that govern the Account, as amended or otherwise modified from time to time.

“ Credit Card Guidelines ” means the written policies and procedures of the Credit Card Originator relating to the operation of its consumer revolving lending business, including written policies and procedures for determining the creditworthiness of credit card customers, the extension of credit to credit card customers and the maintenance of credit card accounts and collection of related receivables, as amended or otherwise modified from time to time.

“ Credit Card Originator ” means (i) WFN and/or any transferee of the Accounts from WFN or (ii) any other originator of Accounts which is designated from time to time pursuant to Section 2.12 and, directly or indirectly, enters into a receivables purchase agreement with Transferor.

“ Credit Card Processing Agreement ” means one or more agreements between the Credit Card Originator (including WFN as assignee of an Other Originator) and a Merchant pursuant to which the Credit Card Originator agrees to extend open end credit card accounts to customers of the Merchant and the Merchant agrees to allow purchases to be made at its retail establishments, or in its catalogue sales business, under such accounts.

“ Daily Report ” is defined in Section 3.4(a).

 

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“ Date of Processing ” means, as to any transaction, the Business Day on which the transaction is first recorded on Servicer’s computer file of consumer revolving accounts (without regard to the effective date of such recordation).

“ Debtor Relief Laws ” means Title 11 of the United States Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, readjustment of debt, marshalling of assets or similar debtor relief laws of the United States, any state or any foreign country from time to time in effect, affecting the rights of creditors generally.

“ Defaulted Receivable ” means, as to any date of determination, all Principal Receivables in any Account which are charged off as uncollectible on that date in accordance with the Credit Card Guidelines and Servicer’s customary and usual servicing procedures for servicing open end credit card account receivables comparable to the Receivables. A Principal Receivable in any Account shall become a Defaulted Receivable on the day on which such Principal Receivable is recorded as charged off in accordance with the Credit Card Guidelines.

“ Deferred Payment Receivables ” means any amount owed by any Merchant to Credit Card Originator in respect of accrued finance charges on any Principal Receivable incurred in connection with a deferred payment plan.

“ Definitive Certificates ” is defined in Section 6.10.

“ Definitive Euro-Certificates ” is defined in Section 6.13.

“ Depository Agreement ” means, as to any Series or Class, any agreement among Transferor, Trustee and any applicable Clearing Agency.

“ Determination Date ” means, unless otherwise specified in any Supplement with respect to the related Series, the second Business Day preceding each Distribution Date.

“ Discount Option Receivables ” means, on any Date of Processing on and after the date on which Transferor’s exercise of its discount option pursuant to Section 2.10 takes effect, the sum of (a) the product of the Discount Percentage and the aggregate Principal Receivables (before subtracting Finance Charge Receivables which are Discount Option Receivables) at the end of the prior day (which amount, prior to the date on which Transferor’s exercise of its discount option takes effect and with respect to Receivables generated prior to such date, shall be zero), plus (b) any New Discount Option Receivables created on such day, minus (c) any Discount Option Receivables Collections received on such Date of Processing.

“ Discount Option Receivables Collections ” means on any Date of Processing on and after the date on which Transferor’s exercise of its discount

 

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option pursuant to Section 2.10 takes effect, the product of (a) a fraction the numerator of which is the amount of the Discount Option Receivables and the denominator of which is the sum of the Principal Receivables plus the amount of Discount Option Receivables in each case (for both numerator and denominator) at the end of the prior Monthly Period and (b) Collections of Principal Receivables, prior to any reduction for Finance Charge Receivables which are Discount Option Receivables, received on such Date of Processing.

“ Discount Percentage ” is defined in Section 2.10.

“ Distribution Date ” means, with respect to any Series, the date specified in the related Supplement.

“ Early Amortization Event ” means, as to any Series, each event specified in Section 9.1 and each additional event, if any, specified in the relevant Supplement as an Early Amortization Event for that Series.

“ Effective Date ” shall mean September 28, 2001.

“ Eligible Account ” means an open end credit card account in an Approved Portfolio owned by the Credit Card Originator that, as of the Trust Cut Off Date (in the case of an Initial Account), the date of creation thereof (in the case of an Automatic Additional Account) or the related Addition Cut Off Date (in the case of a Supplemental Account or an Initial Restatement Date Portfolio Account):

(a) is in existence and is serviced by the Credit Card Originator, any Affiliate of the Credit Card Originator or an Other Originator;

(b) is payable in United States dollars;

(c) except as provided below, has not been identified as an account (i) the credit cards for which have been reported to the Credit Card Originator or the related Other Originator (if any) as lost or stolen or (ii) the Obligor of which is the subject of a bankruptcy proceeding;

(d) none of the Receivables in which have been, sold, pledged, assigned or otherwise conveyed to any Person (except by an Other Originator to the Credit Card Originator or otherwise pursuant to the Receivables Purchase Agreement or this Agreement), unless any such pledge or assignment is released on or before the Initial Closing Date or the Addition Date, as applicable;

(e) except as provided below, none of the Receivables in which are Defaulted Receivables or have been identified by the Credit Card Originator or the related Other Originator (if any), or by the relevant Obligor to the Credit Card Originator or the related Other Originator (if any), as having been incurred as a result of fraudulent use of a credit card; and

 

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(f) has an Obligor who has provided as his or her most recent billing address, an address located in the United States or a United States military address, provided that an account shall not fail to be an “Eligible Account” solely due to the Obligor having provided a billing address not satisfying the foregoing if as of the Trust Cut Off Date (in the case of an Initial Account), the end of the most recently ended Monthly Period (in the case of an Automatic Additional Account) or the related Addition Cut Off Date (in the case of a Supplemental Account or an Initial Restatement Date Portfolio Account) the aggregate Principal Receivables in Accounts the most recent billing address for which does not satisfy the foregoing made up less than 2% (or any higher percentage as to which the Rating Agency Condition has been satisfied) of the aggregate Principal Receivables.

Notwithstanding the foregoing, Eligible Accounts may include accounts, the receivables in which have been written off, or as to which the Credit Card Originator or related Other Originator (if any) believes the related Obligor is bankrupt and certain receivables that have been identified by the Obligor as having been incurred as a result of fraudulent use of credit cards or any credit cards have been reported to the Credit Card Originator or the related Other Originator (if any) as lost or stolen, so long as (1) the balance of all receivables included in such accounts is reflected on the books and records of the Credit Card Originator (and is treated for purposes of this Agreement) as “zero” and (2) charging privileges with respect to all such accounts have been canceled and are not reinstated.

“ Eligible Deposit Account ” means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), and acting as a trustee for funds deposited in such account, so long as any of the securities of such depository institution shall have a credit rating from each of Moody’s, S&P and, if rated by Fitch, Fitch in one of its generic credit rating categories that signifies investment grade.

“ Eligible Institution ” means (a) a depository institution (which may be Trustee or an affiliate) organized under the laws of the United States or any one of the states thereof (i) that has either (A) a long-term unsecured debt rating of “A2” or better by Moody’s or (B) a certificate of deposit rating of “P-1” by Moody’s, (ii) that has either (A) a long-term unsecured debt rating of “AAA” by S&P or (B) a certificate of deposit rating of at least “A-1” by S&P, (iii) that, if rated by Fitch, has either (A) a long-term unsecured debt rating of “AAA” by Fitch or (B) a certificate of deposit rating of at least “F-1” by Fitch and (iv) the deposits of which are insured by the FDIC or (b) any other institution that is acceptable to each Rating Agency, Servicer and Trustee.

 

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“ Eligible Investments ” means book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence:

(a) direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America;

(b) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of foreign banks) and subject to supervision and examination by federal or state banking or depository institution authorities; provided that at the time of the Trust’s investment or contractual commitment to invest therein, the short-term debt rating of such depository institution or trust company shall be in the highest investment category of each of Moody’s and S&P, which in the case of S&P means A-1+, and, if rated by Fitch, Fitch in its highest investment category;

(c) commercial paper or other short-term obligations having, at the time of the Trust’s investment or contractual commitment to invest therein, a rating from each of Moody’s and S&P in its highest investment category, which in the case of S&P means A-1+, and, if rated by Fitch, Fitch in its highest investment category;

(d) demand deposits, time deposits and certificates of deposit which are fully insured by the FDIC, with a Person the commercial paper of which has a credit rating from each of Moody’s and S&P in its highest investment category, which in the case of S&P means A-1+, and, if rated by Fitch, Fitch in its highest investment category;

(e) notes or bankers acceptances (having original maturities of no more than 365 days) issued by any depository institution or trust company referred to in clause (b) ;

(f) investments in money market funds (including funds of Trustee or its affiliates as well as funds for which Trustee and its affiliates may receive compensation) rated in the highest investment category by each of Moody’s and S&P, and, if rated by Fitch, Fitch in its highest investment category, or otherwise approved in writing by each Rating Agency;

(g) time deposits, other than as referred to in clause (d) , with a Person the commercial paper of which has a credit rating in its highest investment category, from each of Moody’s and S&P, which in the case of S&P means A-1+, and, if rated by Fitch, Fitch in its highest investment category; or

 

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(h) any other investments approved in writing by each Rating Agency, provided that making such investments shall not cause the Trust to be required to register as an investment company within the meaning of the Investment Company Act.

“ Eligible Receivable ” means a Receivable:

(a) that has arisen under an Eligible Account;

(b) that was created in compliance with the Credit Card Guidelines and all Requirements of Law applicable to the Credit Card Originator (or, in the case of an Acquired Portfolio Receivable, the related Other Originator) the failure to comply with which would have a material adverse effect on Investor Holders, and pursuant to a Credit Card Agreement that complies with all Requirements of Law applicable to the Credit Card Originator (and, in the case of an Acquired Portfolio Receivable, the related Other Originator during the time prior to the transfer of such Acquired Portfolio Receivable to the Credit Card Originator), the failure to comply with which would have a material adverse effect on Investor Holders;

(c) with respect to which all consents, licenses, approvals or authorizations of, or registrations with, any Governmental Authority required to be obtained or made by the Credit Card Originator (and, in the case of an Acquired Portfolio Receivable, the related Other Originator with respect to such actions prior to the transfer of such Acquired Portfolio Receivable to the Credit Card Originator) in connection with the creation of such Receivable or the execution, delivery and performance by the Credit Card Originator (and, in the case of an Acquired Portfolio Receivable, the related Other Originator with respect to such actions prior to the transfer of such Acquired Portfolio Receivable to the Credit Card Originator) of the related Credit Card Agreement, have been duly obtained or made and are in full force and effect as of the date of creation of such Receivable, but failure to comply with this clause (c)  shall not cause a Receivable not to be an Eligible Receivable if, and to the extent that, the failure to so obtain or make any such consent, license, approval, authorization or registration would not have a material adverse effect on the Investor Holders;

(d) as to which, at the time of its transfer to the Trust, Transferor or the Trust will have good and marketable title free and clear of all Liens (other than any Lien permitted by Section 2.7(b)) ;

 

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(e) that is the subject of a valid transfer and assignment (or the grant of a security interest) from Transferor to the Trust of all Transferor’s right, title and interest therein;

(f) that at and after the time of transfer to the Trust is the legal, valid and binding payment obligation of the Obligor thereof, legally enforceable against such Obligor in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws, and by general principles of equity (whether considered in a suit at law or in equity);

(g) that constitutes an account;

(h) as to which, at the time of its transfer to the Trust, Transferor has not taken any action which, or failed to take any action the omission of which, would, at the time of transfer to the Trust, impair the rights therein of the Trust or the Holders;

(i) that, at the time of its transfer to the Trust, has not been waived or modified except as permitted in accordance with Section 3.3(h) ;

(j) that, at the time of its transfer to the Trust, is not subject to any right of rescission, setoff, counterclaim or any other defense of the Obligor (including the defense of usury), other than defenses arising out of Debtor Relief Laws and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or equity) or as to which Servicer makes an adjustment pursuant to Section 3.9 ; and

(k) as to which, at the time of its transfer to the Trust, the Transferor has satisfied all obligations to be fulfilled at the time it is transferred to the Trust.

“ Eligible Servicer ” means Trustee, a wholly owned subsidiary of Trustee, an Other Originator or an entity that, at the time of its appointment as Servicer: (a) is servicing a portfolio of consumer open end credit card accounts or other consumer open end credit accounts; (b) is legally qualified and has the capacity to service the Accounts; (c) is qualified (or licensed) to use the software that is then being used to service the Accounts or obtains the right to use, or has its own, software which is adequate to perform its duties under this Agreement; (d) has, in the reasonable judgment of Trustee, the ability to professionally and competently service a portfolio of similar accounts; and (e) has a net worth of at least $50,000,000 as of the end of its most recent fiscal quarter.

“ Enhancement ” means the rights and benefits provided to the Investor Holders of any Series or Class pursuant to any letter of credit, surety bond, cash collateral account, guaranty collateral invested amount, spread account, guaranteed rate agreement, maturity guaranty facility, tax protection agreement, interest rate swap agreement, interest rate cap agreement or other similar

 

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arrangement. The subordination of any Class to another Class, or a cross support feature which requires collections on Receivables allocated to one Series to be paid as principal and/or interest with respect to another Series shall be deemed to be an Enhancement for the Class or Series benefitting from the subordination or cross support feature.

“ Enhancement Agreement ” means any agreement, instrument or document governing any Enhancement or pursuant to which any Enhancement is issued or outstanding.

“ Enhancement Provider ” means the Person or Persons providing any Enhancement, other than the Investor Holders of any Class which is subordinated to another Class.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ Excess Finance Charge Collections ” means all amounts that any Supplement designates as “Excess Finance Charge Collections.”

“ Excess Funding Account ” is defined in Section 4.2.

“ Exchange Act ” means the Securities Exchange Act of 1934.

“ Existing PSA ” is defined in the recitals hereto.

“ FDIC ” means the Federal Deposit Insurance Corporation.

“ Finance Charge Receivables ” means, with respect to any Monthly Period, the sum of (a) all amounts billed to the Obligors on any Account at the beginning of such Monthly Period in respect of Periodic Finance Charges, (b) Late Fees, return check fees and any other fees that may after the Trust Cut Off Date be charged with respect to any Account, to the extent that Servicer designates such fees to be treated as Finance Charge Receivables in an Officer’s Certificate delivered to Trustee, (c) Discount Option Receivables and (d) Deferred Payment Receivables. Collections of Finance Charge Receivables with respect to any Monthly Period include the amount of Interchange (if any) allocable to any Series of Certificates pursuant to the related Supplement with respect to such Monthly Period (to the extent received by the Trust and deposited into the Finance Charge Account or any Series Account, as the case may be, on the Transfer Date following such Monthly Period). Except as otherwise specified in any Supplement as to the related Series, Recoveries shall be treated as Collections of Finance Charge Receivables.

“ Finance Charge Shortfalls ” is defined, as to any Series, in the related Supplement.

“ Fitch ” means Fitch, Inc.

 

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“ flow-through entity ” is defined in Section 6.4(d).

“ Global Certificate ” is defined in Section 6.13.

“ Governmental Authority ” means the United States of America, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“ Group ” means, with respect to any Series, the group of Series, if any, in which the related Supplement specifies such Series is to be included.

“ Holder ” means an Investor Holder or a Person in whose name the Transferor Interest is registered.

“ Identified Portfolio ” means any Accounts owned from time to time by WFN and included in the private label credit card program of Service Merchandise or issued under a Co-Branding Agreement.

“ Ineligible Receivables ” is defined in Section 2.5(a).

“ Initial Account ” means each open end credit card account in the Identified Portfolio existing on the Trust Cut Off Date and identified in the Account Schedule delivered on the Initial Closing Date.

“ Initial Closing Date ” means January 30, 1998.

“ Initial Restatement Date Portfolio Accounts ” means the open end credit card accounts in the Restatement Date Portfolios existing on September 25, 2001 and identified in the Account Schedule delivered on the Effective Date.

“ Insolvency Event ” means, (a) with respect to the Transferor, that the Transferor shall consent or fail to object to the appointment of a bankruptcy trustee or conservator, receiver or liquidator in any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Transferor or relating to all or substantially all of the Transferor’s property, or the commencement of an action seeking a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a bankruptcy trustee or conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up, insolvency, bankruptcy, reorganization, conservatorship, receivership or liquidation of such entity’s affairs, or notwithstanding an objection by the Transferor any such action shall have remained undischarged or unstayed for a period of sixty (60) days or upon entry of any order or decree providing for such relief; or such Person shall admit in writing its inability to pay its debts generally as they become due, file, or consent or fail to object (or object without dismissal of any such filing within sixty (60) days of such filing) to the filing of, a petition

 

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to take advantage of any applicable bankruptcy, insolvency or reorganization, receivership or conservatorship statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations and (b) with respect to WFN, WFN shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to all or substantially all of its property, or a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against WFN; or WFN shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations.

“ Insolvency Proceeds ” is defined in Section 9.2(b).

“ In-Store Payments ” is defined in Section 2.1(a).

“ Insurance Proceeds ” means any amounts recovered by Servicer pursuant to any credit insurance policies covering any Obligor with respect to Receivables under such Obligor’s Account.

“ Interchange ” means interchange fees payable to Transferor or an Other Originator, in its capacity as credit card issuer, through VISA U.S.A., Inc. and Mastercard International Inc. in connection with cardholder charges for goods and services, and cash advances, as calculated pursuant to the related Series Supplement for any Series.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986.

“ Invested Amount ” is defined, as to any Series, in the related Supplement.

“ Investment Company Act ” means the Investment Company Act of 1940.

“ Investor Certificate ” means any one of the certificates (including the Bearer Certificates, the Registered Certificates or any Global Certificate) executed by Transferor and authenticated by or on behalf of Trustee, substantially in the form attached to the related Supplement, other than any Certificates representing the Supplemental Interests, if any.

“ Investor Holder ” means the Person in whose name a Registered Certificate is registered in the Certificate Register or the holder of any Bearer Certificate (or the Global Certificate, as the case may be) or Coupon.

“ Investor Interest ” is defined in Section 4.1.

 

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“ Investor Percentage ” is defined, as to any Series, in the related Supplement.

“ Investor Servicing Fee ” is defined, as to any Series, in the related Supplement.

“ Late Fees ” means the fees specified in the Credit Card Agreement applicable to each Account for late fees with respect to such Account.

“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment, participation or equity interest, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement, excluding any lien or filing pursuant to this Agreement; provided that any assignment or transfer pursuant to Section 6.3(c) or (d)  or Section 7.2 shall not constitute a Lien.

“ Majority Holders ” means the Holders of Investor Certificates evidencing more than 50% of the aggregate unpaid principal amount of all outstanding Investor Certificates.

“ Merchant ” means (a) Service Merchandise and (b) any other Person that operates retail establishments at which, or a catalogue sales business in which, goods or services may be purchased under an Account.

“ Minimum Transferor Amount ” means, as of any date of determination, the sum of (a) the product of (i) the sum of (A) the aggregate Principal Receivables and (B) the amounts on deposit in the Excess Funding Account and (ii) the Required Retained Transferor Percentage plus (b) any additional amounts specified in the Supplement for any outstanding Series.

“ Monthly Period ” means as to each Distribution Date, the immediately preceding calendar month, unless otherwise defined in any Supplement.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ New Discount Option Receivables ” means, as of any date of determination, the product of the Discount Percentage and the amount of Principal Receivables (before subtracting Finance Charge Receivables which are Discount Option Receivables) arising on such date of determination.

“ Notice Date ” is defined in Section 2.8(d)(i).

“ Notices ” is defined in Section 13.5(a).

“ Obligor ” means, as to any Account, the Person or Persons obligated to make payments on such Account, including any guarantor.

 

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“ Officer’s Certificate ” means a certificate delivered to Trustee signed by the Chairman of the Board, President, any Vice President or the Treasurer or any Assistant Treasurer of Transferor or Servicer, as the case may be.

“ Opinion of Counsel ” means a written opinion of counsel, who may be counsel for, or an employee of, the Person providing the opinion and which counsel shall be reasonably acceptable to Trustee.

“ Other Originator ” means Banc One and any other Person designated as an Other Originator in a Supplement.

“ Participation Interests ” is defined in Section 2.8(b).

“ Paying Agent ” means any paying agent and co-paying agent appointed pursuant to Section 6.7.

“ Perfection Representations and Warranties ” means the representations and warranties set forth below:

1. General . This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the proceeds thereof in favor of the Trust, which (a) in the case of existing Receivables and the proceeds thereof, is enforceable upon execution of this Agreement against creditors of and purchasers from Transferor, or with respect to then existing Receivables in Additional Accounts, as of the applicable Addition Date, and which will be enforceable with respect to Receivables hereafter and thereafter created and the proceeds thereof upon such creation, in each case as such enforceability may be limited by applicable Debtor Relief Laws, now or hereafter in effect, and by general principles of equity (whether considered in a suit at law or in equity) and (b) upon filing of the financing statements described in clause 4 below and, in the case of Receivables hereafter created, upon the creation thereof, will be prior to all other Liens (other than Liens permitted pursuant to clause 3 below).

2. General . The Receivables constitute “accounts” within the meaning of UCC Section 9-102.

3. Creation . Immediately prior to the conveyance of the Receivables pursuant to this Agreement, Transferor owns and has good and marketable title to the Receivables free and clear of any Lien, claim or encumbrance of any Person; provided that nothing in this clause 3 shall prevent or be deemed to prohibit Transferor from suffering to exist upon any of the Receivables any Liens for any taxes if such taxes shall not at the time be due and payable or if Transferor or RPA Seller, as applicable, shall currently be contesting the validity thereof in good faith by appropriate proceedings and shall have set aside on its books adequate reserves with respect thereto.

 

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4. Perfection . Transferor has caused or will have caused, within ten days of the Effective Date, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest granted by the Transferor to the Trust under this Agreement in the Receivables arising in the Initial Accounts, Automatic Additional Accounts included in the Identified Portfolio and the Initial Restatement Date Portfolio Accounts, and (if any additional filing is so necessary) within 10 days of the applicable Addition Date, in the case of such Receivables arising in Supplemental Accounts and related Automatic Additional Accounts.

5. Priority . Other than the security interest granted to the Trust pursuant to this Agreement, Transferor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Receivables. Transferor has not authorized the filing of and is not aware of any financing statements against Transferor that include a description of collateral covering the Receivables other than any financing statement (i) relating to the security interest granted to Trust hereunder or (ii) that has been terminated.

“ Periodic Finance Charges ” means any finance charges (due to periodic rate) applicable to any Account.

“ Person ” means any legal person, including any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or other entity of similar nature.

“ Portfolio Yield ” is defined, as to any Series, in the related Supplement.

“ Principal Receivable ” means all Receivables other than Finance Charge Receivables. In calculating the aggregate amount of Principal Receivables on any day, the amount of Principal Receivables shall not include Defaulted Receivables and shall be reduced by the aggregate amount of credit balances in the Accounts on such day.

“ Principal Sharing Series ” means a Series that, pursuant to the Supplement therefor, is entitled to receive Shared Principal Collections.

“ Principal Shortfalls ” is defined, as to any Series, in the related Supplement.

“ Principal Terms ” means, with respect to any Series: (a) its name or designation; (b) its initial principal amount (or method for calculating such amount) and its invested amount in the Trust; (c) its interest rate (or method for the determination thereof); (d) the payment date or dates and the date or dates from which interest shall accrue; (e) the method for allocating Collections to Holders of such Series; (f) the designation of any Series Accounts and the terms governing the operation of any such Series Accounts; (g) the percentage used to calculate the servicing fee with respect thereto; (h) the provider, if any, and the

 

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terms of any form of Enhancement with respect thereto; (i) the terms on which the Investor Certificates of such Series may be repurchased by Transferor or any Affiliate of Transferor or remarketed to other investors; (j) the Series Termination Date; (k) the number of Classes of Investor Certificates of such Series and, if such Series consists of more than one Class, the rights and priorities of each such Class; (l) the extent to which the Investor Certificates of such Series will be issuable in temporary or permanent global form (and, in such case, the depositary for such Global Certificate or Certificates, the conditions, if any, upon which such Global Certificates may be exchanged, in whole or in part, for Definitive Certificates, and the manner in which any interest payable on a Global Certificate will be paid); (m) whether the Investor Certificates of such Series may be issued as Bearer Certificates and any limitation imposed thereon; (n) the priority of such Series with respect to any other Series; (o) the Group, if any, to which such Series belongs; (p) whether Interchange or other fees will be included in the funds available to be paid for such Series; and (q) any other terms of such Series.

“ Rating Agency ” means, as to each Series, the rating agency or agencies, if any, specified in the related Supplement.

“ Rating Agency Condition ” means, with respect to any action, that each Rating Agency, if any, shall have notified Transferor, Servicer and Trustee in writing that such action will not result in a reduction or withdrawal of the rating, if any, of any outstanding Series or Class with respect to which it is a Rating Agency.

“ Reassignment ” is defined in Section 2.9(a).

“ Receivable ” means any amount owing from time to time by an Obligor under an Account, including amounts owing for purchases of goods and services, and amounts payable as Finance Charge Receivables. A Receivable shall be deemed to have been created at the end of the day on the Date of Processing of such Receivable. Receivables which become Defaulted Receivables shall not be shown on Servicer’s records as amounts payable (and shall cease to be included as Receivables) on the day on which they become Defaulted Receivables.

“ Receivable Purchase Agreement ” means the Receivables Purchase Agreement, dated as of September 28, 2001 between RPA Seller and Transferor.

“ Record Date ” means, as to any Distribution Date, the date specified in the related Supplement.

“ Recoveries ” means (a) all amounts received by Servicer with respect to Principal Receivables that have previously become Defaulted Receivables and with respect to Finance Charge Receivables that have been charged off as uncollectible (including Insurance Proceeds) and (b) proceeds of any collateral securing any Receivable, in each case less related collection expenses.

“ Registered Certificates ” is defined in Section 6.1.

 

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“ Registered Holder ” means the Holder of a Registered Certificate.

“ Removal Date ” is defined in Section 2.9(a)(i).

“ Removal Notice Date ” is defined in Section 2.9(a)(i).

“ Removed Accounts ” is defined in Section 2.9(a).

“ Required Principal Balance ” means, as of any date of determination, the sum of the numerators used at such date to calculate the Investor Percentage with respect to Principal Receivables for all Series outstanding on such date, less the amount on deposit in the Excess Funding Account as of the date of determination.

“ Required Retained Transferor Percentage ” means, as of any date of determination, 7% or, if less, the highest of the Required Retained Transferor Percentages specified in the Supplements for all outstanding Series.

“ Requirements of Law ” means, as to any Person, the certificate of incorporation or articles of association and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, in each case applicable to or binding upon such Person or to which such Person is subject, whether Federal, state or local.

“ Responsible Officer ” means any officer (a) within the Corporate Trust Department (or any successor group of Trustee), including any vice president, assistant vice president, assistant secretary or any other officer or assistant officer of Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at Trustee’s Corporate Trust Office because of such officer’s knowledge of and familiarity with the particular subject and (b) who shall have direct responsibility for this Agreement.

“ Restart Date ” is defined in Section 2.8(a).

“ Restatement Date Portfolios ” means any Accounts owned from time to time by WFN and included in the private label credit card programs of Maurices Inc., Harlem Furniture Inc. and Valuevision International Inc.

“ RPA Seller ” means WFN, in its capacity as RPA Seller under the Receivables Purchase Agreement.

“ Rule 144A ” means Rule 144A under the Securities Act, as such Rule may be amended from time to time.

“ S&P ” means Standard & Poor’s Ratings Service, a division of the McGraw Hill Companies, Inc.

 

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“ S&P Condition ” means, with respect to any action, that Standard & Poor’s, a division of the McGraw Hill Companies, Inc., for so long as S&P shall, at the request of the Transferor, rate any outstanding series or class of securities issued by the Transferor or a securitization trust for which the Transferor acts as depositor, shall have notified Transferor, Servicer and Trustee that such action will not result in a reduction or withdrawal of the rating, if any, of any such outstanding series or class of securities rated by S&P.

“ Securities Act ” means the Securities Act of 1933.

“ Series ” means any series of Investor Certificates established pursuant to a Supplement.

“ Series Account ” means any deposit, trust, escrow or similar account maintained for the benefit of the Investor Holders of any Series or Class, as specified in any Supplement.

“ Series Servicing Fee Percentage ” is defined, as to any Series, in the related Supplement.

“ Series Termination Date ” is defined, as to any Series, in the related Supplement.

“ Service Merchandise ” means Service Merchandise Company, Inc., a Tennessee corporation.

“ Service Transfer ” is defined in Section 10.1.

“ Servicer ” means WFN, in its capacity as Servicer pursuant to this Agreement, and, after any Service Transfer, the Successor Servicer.

“ Servicer Default ” is defined in Section 10.1.

“ Servicing Fee ” means, as to any Series, the servicing fee specified in Section 3.2.

“ Servicing Officer ” means any officer of Servicer involved in, or responsible for, the administration and servicing of the Receivables whose name appears on a list of servicing officers furnished to Trustee by Servicer on the Initial Closing Date, as such list may from time to time be amended.

“ Shared Principal Collections ” means all amounts that any Supplement designates as “Shared Principal Collections.”

“ Specified Transferor Amount ” means, as of any date of determination, 0 or, if more, the highest amount identified as the “Specified Transferor Amount” in the Supplement for any outstanding Series.

 

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“ Subject Certificate ” is defined in Section 6.4(d).

“ Successor Servicer ” is defined in Section 10.2(a).

“ Supplement ” means, as to any Series, a supplement to this Agreement, executed and delivered in connection with the original issuance of the Investor Certificates of such Series pursuant to Section 6.3, and all amendments thereof and supplements thereto.

“ Supplemental Account ” is defined in Section 2.8(b).

“ Supplemental Interest ” is defined in Section 6.3(c).

“ Tax Opinion ” means, with respect to any action, an Opinion of Counsel to the effect that, for Federal income tax purposes, (a) such action will not adversely affect the tax characterization as debt of Investor Certificates of any outstanding Series or Class with respect to which an Opinion of Counsel was delivered at the time of their issuance that such Investor Certificates would be characterized as debt, (b) such actions will not cause the Trust to be classified, for federal income tax purposes, as an association (or publicly traded partnership) taxable as a corporation and (c) such action will not cause or constitute an event in which gain or loss would be recognized by any Investor Holder.

“ Termination Notice ” is defined in Section 10.1.

“ Transaction Documents ” means, at any time, this Agreement, the Receivables Purchase Agreement, the Supplement for each outstanding Series, any document pursuant to which any outstanding purchased interest is sold as permitted by Section 6.3(b) and any other document designated as a Transaction Document in any Supplement or any document pursuant to which any outstanding purchased interest is sold as permitted by Section 6.3(b) .

“ Transfer Agent and Registrar ” is defined in Section 6.4.

“ Transfer Date ” means the Business Day immediately preceding each Distribution Date.

“ Transferor ” means WFN Credit Company, LLC, a Delaware limited liability company, and additional transferors, if any, designated in accordance with Section 2.11 or 6.3(d) .

“ Transferor Amount ” means, on any date of determination, the excess, if any, of (a) the aggregate amount of Principal Receivables on such day, plus the principal amount on deposit in the Excess Funding Account on such day over (b) the sum of the Invested Amounts (or, as to any Series that has an Adjusted Invested Amount, the Adjusted Invested Amount) with respect to all Series then outstanding, plus the outstanding principal amount of all Supplemental Interests (and of any purchased interest sold pursuant to Section 6.3(b)) .

 

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“ Transferor Interest ” is defined in Section 4.1.

“ Transferor Retained Certificate ” means any Certificate in any Class of Investor Certificates that is designated as a “Transferor Retained Class” in any Supplement.

“ Transferor Percentage ” means as to Finance Charge Receivables, Defaulted Receivables and Principal Receivables, 100% less the sum of the applicable Investor Percentages for all outstanding Series.

“ Transferred Account ” is defined in the definition of “Account.”

“ Trust ” means the Trust created by this Agreement, which shall be known as the World Financial Network Credit Card Master Trust III.

“ Trust Assets ” is defined in Section 2.1.

“ Trust Cut Off Date ” means January 30, 1998.

“ Trustee ” means The Chase Manhattan Bank, a New York banking corporation, in its capacity as trustee of the Trust, or any successor trustee appointed as herein provided.

“ UCC ” means the Uniform Commercial Code, as in effect in the State of Ohio and in any other State where the filing of a financing statement is required to perfect Transferor’s or the Trust’s interest in the Receivables and the proceeds thereof or in any other specified jurisdiction.

“ United States ” means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

“ Variable Interest ” means either of (a) any Investor Certificate that is designated as a variable funding certificate in the related Supplement and (b) any purchased interest sold as permitted by Section 6.3(b) .

“ WFN ” is defined in the preamble.

SECTION 1.2 Other Interpretive Provisions . With respect to any Series, all terms used and not defined herein are used as defined in the related Supplement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document delivered pursuant hereto unless otherwise defined therein. For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles; (b) terms defined in Article 9 of the UCC and not otherwise defined in

 

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this Agreement are used as defined in that Article; (c) any reference to each Rating Agency shall only apply to any specific rating agency if such rating agency is then rating any outstanding Series; (d) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (e) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of this Agreement (or such certificate or document); (f) references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to this Agreement (or the certificate or other document in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (g) the term “including” means “including without limitation”; (h) references to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (i) references to any agreement refer to that agreement as amended from time to time; (j) references to any Person include that Person’s permitted successors and assigns; and (k) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof. The agreements, representations and warranties of WFN in this Agreement, in its respective capacities as Transferor and Servicer, shall be deemed to be the separate agreements, representations and warranties of WFN only so long as it remains a party to this Agreement in such capacity (but the foregoing shall not impair rights arising during or with respect to the time that such Person was a party to this Agreement in such capacity).

ARTICLE II CONVEYANCE OF RECEIVABLES

SECTION 2.1 Conveyance of Receivables . (a) By execution of this Agreement, Transferor transfers, assigns, sets over and otherwise conveys to the Trustee, for the benefit of the Investor Holders, all of its right, title and interest in, to and under (i) the Receivables existing at the close of business on the Trust Cut Off Date and thereafter arising from time to time in the Initial Accounts and the Receivables existing on each applicable Addition Date and thereafter arising from time to time in the Initial Restatement Date Portfolio Accounts and the Additional Accounts, all Recoveries allocable to the Trust as provided herein, all moneys due or to become due and all amounts received with respect to, and proceeds of, any of the foregoing, (ii) all of its rights, remedies, powers and privileges under the Receivables Purchase Agreement and (iii) without limiting the generality of the foregoing or the following, all of Transferor’s rights pursuant to the Receivables Purchase Agreement to receive from RPA Seller Deferred Payment Receivables and payments made by any Merchant under any Credit Card Processing Agreement on account of amounts received by such Merchant in payment of Receivables (“ In-Store Payments ”) and all proceeds of such rights, and (iv) the right to receive certain amounts paid or payable as Interchange (if provided for in any Supplement). Such property, together with all moneys on deposit in the Collection Account, the Excess Funding Account, the Series Accounts and any

 

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Enhancement shall constitute the assets of the Trust (the “ Trust Assets ”). The foregoing does not constitute and is not intended to result in the creation or assumption by the Trust, Trustee, any Investor Holders or any Enhancement Provider of any obligation of the Credit Card Originator, Servicer, Transferor or any other Person in connection with the Accounts or the Receivables or under any agreement or instrument relating thereto, including any obligation to obligors, merchant banks, merchants clearance systems or insurers. The parties hereto intend that each transfer of Receivables and other property pursuant to the Agreement or any Assignment constitute a sale, and not a secured borrowing, for accounting purposes. If the foregoing transfer, assignment, setover and conveyance is not deemed to be an absolute assignment of the subject property to the Trustee, for the benefit of the Holders, then it shall be deemed to constitute a grant of a security interest in such property to the Trustee, for the benefit of the Investor Holders, and the Transferor Interest shall be deemed to represent Transferor’s equity in the collateral granted.

(b) Transferor agrees to record and file, at its own expense, financing statements (and continuation statements when applicable) with respect to the Receivables now existing and hereafter created in Accounts owned by the Credit Card Originator and other Trust Assets meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect, and maintain the perfection of, the assignment of such Receivables to the Trust, and to deliver a file stamped copy of each such financing statement or other evidence of such filing (which may, for purposes of this Section 2.1 consist of telephone confirmation of such filing promptly followed by delivery to Trustee of a file-stamped copy) to Trustee on or prior to the Initial Closing Date, in the case of such Receivables arising in the Initial Accounts and Automatic Additional Accounts included in the Identified Portfolio, and (if any additional filing is so necessary) the applicable Addition Date, in the case of such Receivables arising in Supplemental Accounts and the Initial Restatement Date Portfolio Accounts and any related Automatic Additional Accounts. Trustee shall be under no obligation whatsoever to file such financing or continuation statements or to make any other filing under the UCC in connection with such assignment.

(c) Transferor further agrees, at its own expense, (i) on or prior to (A) the Automatic Addition Termination Date or any Automatic Addition Suspension Date, or subsequent to a Restart Date, in the case of the Initial Accounts and any Additional Accounts designated pursuant hereto prior to such date, (B) the applicable Addition Date, in the case of Supplemental Accounts and the Initial Restatement Date Portfolio Accounts and (C) the applicable Removal Date, in the case of Removed Accounts, to cause to be indicated in the appropriate computer files that Receivables created in connection with the Accounts owned by the Credit Card Originator (other than Removed Accounts) have been conveyed to the Trust pursuant to this Agreement for the benefit of the Holders (or conveyed to Transferor or its designee in accordance with Section 2.9 , in the case of Removed Accounts) by including in such computer files the code identifying each such Account (or, in the case of Removed Accounts, either including such a code

 

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identifying the Removed Accounts only if the removal occurs prior to the Automatic Addition Termination Date or an Automatic Addition Suspension Date, or subsequent to a Restart Date, or deleting such code thereafter) and (ii) on or prior to the date referred to in clauses (i)(A), (B)  or (C) , as applicable, to deliver to Trustee an Account Schedule ( provided that such Account Schedule shall be provided in respect of Automatic Additional Accounts on or prior to the Determination Date relating to the Monthly Period during which their respective Addition Dates occur), specifying for each such Account, as of the Automatic Addition Termination Date or Automatic Addition Suspension Date, in the case of clause (i)(B) , the applicable Addition Cut Off Date, in the case of Supplemental Accounts and Initial Restatement Date Portfolio Accounts, and the Removal Date, in the case of Removed Accounts, its account number, the aggregate amount outstanding in such Account and the aggregate amount of Principal Receivables outstanding in such Account. Such Account Schedule shall be supplemented from time to time to reflect Supplemental Accounts and Removed Accounts. Once the code referenced in clause (i)  of this paragraph has been included with respect to any Account, Transferor further agrees not to permit such code to be altered during the remaining term of this Agreement unless and until (x) such Account becomes a Removed Account, (y) a Restart Date has occurred on which the Transferor starts including Automatic Additional Accounts as Accounts or (z) Transferor shall have delivered to Trustee at least 30 days’ prior written notice of its intention to do so and has taken such action as is necessary or advisable to cause the interest of Trustee in the Receivables and other Trust Assets to continue to be perfected with the priority required by this Agreement.

(d) By executing this Agreement and the Receivables Purchase Agreement, the parties hereto and thereto do not intend to cancel, release or in any way impair the conveyance made by WFN, in its capacity as “Transferor” under the Existing PSA. Without limiting the foregoing, the parties hereto acknowledge and agree as follows:

(i) Any transfer, assignment or other conveyance by the RPA Seller to the Transferor of assets under the Receivables Purchase Agreement or under any Transaction Document shall be subject to any rights in such assets granted by WFN, as “Transferor” under the Existing PSA, to the Trustee pursuant to the Existing PSA.

(ii) The trust created by and maintained under the Existing PSA shall continue to exist and be maintained under this Agreement.

(iii) All series of investor certificates issued under the Existing PSA shall constitute Series issued and outstanding under this Agreement, and any supplement executed in connection with such series shall constitute a Supplement executed hereunder.

(iv) All references to the Existing PSA in any other instruments or documents shall be deemed to constitute references to this Agreement.

 

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All references in such instruments or documents to WFN in its capacity as the “Transferor” of receivables and related assets under the Existing PSA shall be deemed to include reference to the Transferor in such capacity hereunder.

(v) The Transferor hereby assumes and agrees to perform all obligations of WFN, in its capacity as “Transferor” (but not as “Servicer”), under or in connection with the Existing PSA (as amended and restated by this Agreement) and any supplements to the Existing PSA.

(vi) To the extent this Agreement requires that certain actions are to be taken as of the Initial Closing Date or another date prior to the Effective Date, WFN’s execution of such action under the Existing PSA shall constitute satisfaction of such requirement.

SECTION 2.2 Acceptance by Trustee . (a) Trustee accepts on behalf of the Trust all right, title and interest to the property, now existing and hereafter created, conveyed to the Trust pursuant to Section 2.1 and declares that it shall maintain such right, title and interest, upon the trust herein set forth, for the benefit of all Holders.

(b) Trustee shall have no power to create, assume or incur indebtedness or other liabilities in the name of the Trust other than as contemplated in this Agreement or any Supplement. Trustee, in the name of the Trust, shall have no power to hold any derivative financial instrument unless such derivative financial instrument complies with the requirements of paragraph 40 of Statement of Financial Accounting Standards No. 140 issued by the Financial Accounting Standards Board, including any interpretations thereof or any successor regulations issued by the Financial Accounting Standards Board.

SECTION 2.3 Representations and Warranties of Transferor Relating to Transferor . Transferor represents and warrants to the Trust as of each Closing Date and as of the Effective Date as follows:

(a) Organization and Good Standing . Transferor is a limited liability company validly existing in good standing under the laws of the State of Delaware, and has full power, authority and legal right to own its properties and conduct its business as presently owned and conducted, to execute, deliver and perform its obligations under each Transaction Document and to execute and deliver to Trustee the Certificates.

(b) Due Qualification . Transferor is duly qualified to do business and is in good standing as a foreign limited liability company (or is exempt from such requirements), and has obtained all necessary licenses and approvals in each jurisdiction in which failure to so qualify or to obtain such licenses and approvals would render any Credit Card Agreement or any Receivable transferred to the Trust by Transferor

 

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unenforceable by the Credit Card Originator, Transferor, Servicer or Trustee and would have a material adverse effect on the interests of the Holders hereunder or under any Supplement.

(c) Due Authorization . The execution, delivery and performance of this Agreement and each other Transaction Document by Transferor, the execution and delivery to Trustee of the Certificates by Transferor and the consummation by Transferor of the transactions provided for in each Transaction Document have been duly authorized by Transferor by all necessary limited liability company action on the part of Transferor.

(d) No Conflict . The execution and delivery by Transferor of each Transaction Document and the Certificates, the performance by Transferor of the transactions contemplated by each Transaction Document and the fulfillment by Transferor of the terms hereof and thereof will not conflict with, result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any indenture, contract, agreement, mortgage, deed of trust, or other instrument to which Transferor is a party or by which it or any of its properties are bound.

(e) No Violation . The execution and delivery by Transferor of each Transaction Document and the Certificates, the performance by Transferor of the transactions contemplated by this Agreement and each Supplement and the fulfillment by Transferor of the terms hereof and thereof will not conflict with or violate any Requirements of Law applicable to Transferor.

(f) No Proceedings . There are no proceedings or investigations pending or, to the best knowledge of Transferor, threatened against Transferor, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (i) asserting the invalidity of any Transaction Document or the Certificates, (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by any Transaction Document or the Certificates, (iii) seeking any determination or ruling that, in the reasonable judgment of Transferor, would materially and adversely affect the performance by Transferor of its obligations under any Transaction Document, (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of any Transaction Document or the Certificates or (v) seeking to affect adversely the income tax attributes of the Trust under the Federal or applicable state income or franchise tax systems.

(g) All Consents Required . All approvals, authorizations, consents, orders or other actions of any Person or of any governmental

 

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body or official required in connection with the execution and delivery by Transferor of each Transaction Document and the Certificates, the performance by Transferor of the transactions contemplated by each Transaction Document and the fulfillment by Transferor of the terms hereof and thereof, have been obtained.

(h) Insolvency . No Insolvency Event with respect to Transferor has occurred. Transferor did not (i) execute the Transaction Documents, (ii) grant to the Trustee the security interests described in Section 2.1 , (iii) cause, permit, or suffer the perfection or attachment of such a security interest, (iv) otherwise effectuate or consummate any transfer to Trustee pursuant to any Transaction Document or (v) acquire its interest in the Trust, in each case:

(A) in contemplation of insolvency;

(B) with a view to preferring one creditor over another or to preventing the application of its assets in the manner required by applicable law or regulations;

(C) after committing an act of insolvency; or

(D) with any intent to hinder, delay, or defraud itself or its creditors.

(i) Trustee . Trustee is not an insider or Affiliate of Transferor.

The representations and warranties of Transferor set forth in this Section 2.3 shall survive the transfer and assignment by Transferor of the respective Receivables to the Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of any of the representations and warranties by Transferor set forth in this Section 2.3 , the party discovering such breach shall give prompt written notice to the others and to each Enhancement Provider, if any, entitled thereto pursuant to the relevant Supplement. Transferor agrees to cooperate with Servicer and Trustee in attempting to cure any such breach. For purposes of the representations and warranties set forth in this Section 2.3 , each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the relevant Closing Date.

SECTION 2.4 Representations and Warranties of Transferor Relating to Transaction Documents and the Receivables . (a) Representations and Warranties. Transferor represents and warrants to the Trust as of the Effective Date, each Closing Date and, with respect to Additional Accounts, the related Addition Date that:

(i) each Transaction Document and, in the case of Supplemental Accounts, the related Assignment, each constitutes a legal, valid and binding obligation of Transferor, enforceable against Transferor

 

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in accordance with its terms, except as such enforceability may be limited by applicable Debtor Relief Laws now or hereafter in effect and by general principles of equity (whether considered in a suit at law or in equity);

(ii) as of the Automatic Addition Termination Date or any Automatic Addition Suspension Date and as of each subsequent Addition Date with respect to Supplemental Accounts and the Initial Restatement Date Portfolio Accounts, and as of the applicable Removal Date with respect to the Removed Accounts, the Account Schedule delivered pursuant to this Agreement, as supplemented to such date, is an accurate and complete listing in all material respects of all the Accounts as of such Automatic Addition Termination Date, such Automatic Addition Suspension Date, the related Addition Cut Off Date or such Removal Date, as the case may be, and the information contained therein with respect to the identity of such Accounts and the Receivables existing in such Accounts is true and correct in all material respects as of such specified date;

(iii) Transferor is the legal and beneficial owner of all right, title and interest in each Receivable and Transferor has the full right to transfer such Receivables to the Trust, and each Receivable conveyed to the Trust by Transferor has been conveyed to the Trust free and clear of any Lien of any Person claiming through or under Transferor or any of its Affiliates (other than Liens permitted under Section 2.7(b)) and in compliance, in all material respects, with all Requirements of Law applicable to Transferor;

(iv) all authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given by Transferor in connection with the conveyance by Transferor of Receivables to the Trust have been duly obtained, effected or given and are in full force and effect;

(v) this Agreement or, in the case of Supplemental Accounts, the related Assignment constitutes either a valid transfer and assignment to the Trust of all right, title and interest of Transferor in the Receivables and other Trust Assets conveyed to the Trust by Transferor and all monies due or to become due with respect thereto and the proceeds thereof or a grant of a security interest in such property to the Trustee, for the benefit of the Investor Holders, which, in the case of existing Receivables and the proceeds thereof, is enforceable upon execution and delivery of this Agreement, or, with respect to then existing Receivables in Additional Accounts, as of the applicable Addition Date, and which will be enforceable with respect to such Receivables hereafter and thereafter created and the proceeds thereof upon such creation, in each case except as such enforceability may be limited by applicable Debtor Relief Laws, now or hereafter in effect, and by general principles of equity (whether

 

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considered in a suit at law or in equity). Upon the filing of the financing statements pursuant to Section 2.1 and, in the case of Receivables hereafter created and the proceeds thereof, upon the creation thereof, the Trust shall have a first priority security interest in such property and proceeds except for Liens permitted under Section 2.7(b) ;

(vi) except as otherwise expressly provided in this Agreement or any Supplement, neither Transferor nor any Person claiming through or under Transferor has any claim to or interest in the Collection Account, the Excess Funding Account, any Series Account or any Enhancement;

(vii) on the Trust Cut Off Date, with respect to each Initial Account, on the date of its creation or the date it otherwise becomes an Automatic Additional Account, with respect to each Automatic Additional Account and, on the applicable Addition Cut Off Date, with respect to each related Supplemental Account or Initial Restatement Date Portfolio Account, each such Account is an Eligible Account;

(viii) on the Trust Cut Off Date, each Receivable then existing is an Eligible Receivable, on the date of creation of each Automatic Additional Account or the date the related account otherwise becomes an Automatic Additional Account, each Receivable contained in such Automatic Additional Account is an Eligible Receivable and, on the applicable Addition Cut Off Date, each Receivable contained in any related Supplemental Account or related Initial Restatement Date Portfolio Account is an Eligible Receivable; and

(ix) as of the date of the creation of any new Receivable, such Receivable is an Eligible Receivable.

(b) Perfection Representations and Warranties . Transferor hereby makes the Perfection Representations and Warranties to the Trust. The rights and remedies with respect to any breach of the Perfection Representations and Warranties made under this Section 2.4(b) shall be continuing and shall survive any termination of this Agreement. Neither the Trust nor the Trustee shall waive a breach of any Perfection Representation and Warranty. In order to evidence the interests of the Transferor and the Trust under this Agreement, the Transferor and Servicer shall, from time to time take such action, and execute and deliver such instruments (including, without limitation, such actions or filings as are requested by the Trustee and financing statements under the UCC as enacted and then in effect in any other jurisdiction in which the Transferor is organized, has its principal place of business or maintains any books, records, files, or other information concerning the Receivables) in order to maintain and perfect, as a first priority interest, the security interest in the Receivables. The Transferor hereby authorizes Servicer to file financing statements under the UCC without the Transferor’s signature where allowed by applicable law.

 

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(c) Notice of Breach . The representations and warranties of Transferor set forth in this Section 2.4 shall survive the transfer and assignment by Transferor of Receivables to the Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of any of the representations and warranties by Transferor set forth in this Section 2.4 , the party discovering such breach shall give prompt written notice to the others and to each Enhancement Provider, if any, entitled thereto pursuant to the relevant Supplement. Transferor agrees to cooperate with Servicer and Trustee in attempting to cure any such breach. For purposes of the representations and warranties set forth in this Section 2.4 , each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the date of the relevant representations or warranties.

SECTION 2.5 Reassignment of Ineligible Receivables . (a)  Reassignment of Receivables . If (i) any representation or warranty of Transferor contained in Section 2.4(a)(ii) , (iii) , (iv) , (vii) , (viii)  or (ix)  is not true and correct in any material respect as of the date specified therein with respect to any Receivable transferred to the Trust by Transferor or any Account and as a result of such breach any Receivables in the related Account become Defaulted Receivables or the Trust’s rights in, to or under such Receivables or the proceeds of such Receivables are impaired or such proceeds are not available for any reason to the Trust free and clear of any Lien, unless cured within 60 days (or such longer period, not in excess of 150 days, as may be agreed to by Trustee) after the earlier to occur of the discovery thereof by Transferor or receipt by Transferor or a designee of Transferor of notice thereof given by Trustee, or (ii) it is so provided in Section 2.7(a) with respect to any Receivables transferred to the Trust by Transferor, then such Receivable shall be designated an “ Ineligible Receivable ” and shall be assigned a principal balance of zero for the purpose of determining the aggregate amount of Principal Receivables on any day; provided that such Receivables will not be deemed to be Ineligible Receivables but will be deemed Eligible Receivables and such Principal Receivables shall be included in determining the aggregate Principal Receivables in the Trust if, on any day prior to the end of such 60-day or longer period, (x) either (A) in the case of an event described in clause (i) , the relevant representation and warranty shall be true and correct in all material respects as if made on such day or (B) in the case of an event described in clause (ii) , the circumstances causing such Receivable to become an Ineligible Receivable shall no longer exist and (y) Transferor shall have delivered an Officer’s Certificate describing the nature of such breach and the manner in which the relevant representation and warranty became true and correct.

(b) Price of Reassignment . On and after the date of its designation as an Ineligible Receivable, each Ineligible Receivable shall not be given credit in determining the aggregate amount of Principal Receivables used to calculate the Transferor Amount or the Investor Percentages applicable to any Series. If, following the exclusion of such Principal Receivables from the calculation of the Transferor Amount, the Transferor Amount would be less than the Specified Transferor Amount, Transferor shall make a deposit into the Excess Funding

 

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Account in immediately available funds prior to the next succeeding Business Day in an amount equal to the amount by which the Transferor Amount would be less than the Specified Transferor Amount (up to the amount of such Principal Receivables). The payment of such deposit amount in immediately available funds shall otherwise be considered payment in full of all of the Ineligible Receivables.

The obligation of Transferor to make the deposits, if any, required to be made to the Excess Funding Account as provided in this Section, shall constitute the sole remedy respecting the event giving rise to such obligation available to Holders (or Trustee on behalf of the Holders) or any Enhancement Provider.

SECTION 2.6 Reassignment of Receivables in Trust Portfolio . If any representation or warranty of Transferor set forth in Section 2.3(a) , (b)  or (c)  or Section 2.4(a)(i) , (v)  or (vi)  is not true and correct in any material respect and such breach has a material adverse effect on the Investor Interest in the Receivables transferred to the Trust by Transferor, then either Trustee or the Majority Holders, by notice then given to Transferor and Servicer (and to Trustee if given by the Investor Holders), may direct Transferor to accept a reassignment of the Receivables transferred to the Trust by Transferor if such breach and any material adverse effect caused by such breach is not cured within 60 days of such notice (or within such longer period, not in excess of 150 days, as may be specified in such notice), and upon those conditions Transferor shall be obligated to accept such reassignment on the terms set forth below; provided that such Receivables will not be reassigned to Transferor if, on any day prior to the end of such 60-day or longer period (i) the relevant representation and warranty shall be true and correct in all material respects as if made on such day and (ii) Transferor shall have delivered an Officer’s Certificate describing the nature of such breach and the manner in which the relevant representation and warranty became true and correct.

Transferor shall deposit in the Collection Account in immediately available funds not later than 12:00 noon, New York City time, on the first Distribution Date following the Monthly Period in which such reassignment obligation arises, in payment for such reassignment, an amount equal to the sum of the amounts specified therefor with respect to each outstanding Series in the related Supplement. Notwithstanding anything to the contrary in this Agreement, such amounts shall be distributed on such Distribution Date in accordance with Article IV and each Supplement. The payment of such deposit amount in immediately available funds shall otherwise be considered payment in full of all of the Receivables.

Upon the deposit, if any, required to be made to the Collection Account as provided in this Section or Section 2.5 , Trustee, on behalf of the Trust, shall automatically and without further action be deemed to transfer, assign, set over and otherwise convey to Transferor or its designee, without recourse, representation or warranty (except for the warranty that since the date of transfer

 

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by Transferor, Trustee has not sold, transferred or encumbered any such Receivables or interest therein), all the right, title and interest of the Trust in and to the applicable Receivables, all moneys due or to become due and all amounts received with respect thereto and all proceeds thereof. Trustee shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by Transferor to effect the conveyance of such Receivables pursuant to this Section. The obligation of Transferor to accept reassignment of any Receivables, and to make the deposits, if any, required to be made to the Collection Account as provided in this Section, shall constitute the sole remedy respecting the event giving rise to such obligation available to Holders (or Trustee on behalf of the Holders).

SECTION 2.7 Covenants of Transferor . Transferor covenants as follows:

(a) Receivables to be Accounts . Except in connection with the enforcement or collection of an Account, Transferor will take no action to cause any Receivable transferred by it to the Trust to be evidenced by any instrument and, if any such Receivable is so evidenced (whether or not in connection with the enforcement or collection of an Account), it shall be deemed to be an Ineligible Receivable in accordance with Section 2.5(a) and shall be reassigned to Transferor in accordance with Section 2.5(b) .

(b) Security Interests . Except for the conveyances hereunder, Transferor will not sell, pledge, assign or transfer or otherwise convey to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Receivable, whether now existing or hereafter created, or any interest therein; Transferor will immediately notify Trustee of the existence of any Lien on any Receivable of which Transferor has knowledge; and Transferor shall defend the right, title and interest of the Trust in, to and under the Receivables, whether now existing or hereafter created, against all claims of third parties claiming through or under Transferor or RPA Seller; provided that nothing in this Section 2.7(b) shall prevent or be deemed to prohibit Transferor from suffering to exist upon any of the Receivables (i) any Liens for taxes if such taxes shall not at the time be due and payable or if Transferor or RPA Seller, as applicable, shall currently be contesting the validity thereof in good faith by appropriate proceedings and shall have set aside on its books adequate reserves with respect thereto, or (ii) at any time when accounts subject to any Co-Branding Agreement are included in the Identified Portfolio, rights of the counterparty to such Co-Branding Agreement in respect of such accounts and related receivables, which rights arise pursuant to the terms of such Co-Branding Agreement and do not constitute a Lien on any Receivables transferred to the Trust hereunder. Notwithstanding the foregoing, nothing in this Section 2.7(b) shall be construed to prevent or be deemed to prohibit the transfer of the Transferor Interest and certain other rights of Transferor in accordance with this Agreement and any related Supplement.

 

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(c) Transferor Interest . Except as otherwise permitted herein, including in Sections 2.11, 6.3 and 7.2 , Transferor agrees not to transfer, assign, exchange or otherwise convey or pledge, hypothecate or otherwise grant a security interest in the Transferor Interest (or any interest therein) or any Supplemental Interest (or any interest therein) and any such attempted transfer, assignment, exchange, conveyance, pledge, hypothecation or grant shall be void.

(d) Delivery of Collections or Recoveries . If Transferor receives Collections or Recoveries, then Transferor agrees to pay Servicer all such Collections and Recoveries as soon as practicable after receipt thereof but in no event later than two Business Days after the Date of Processing by Transferor.

(e) Notice of Liens . Transferor shall notify Trustee and each Enhancement Provider, if any, entitled to such notice pursuant to the relevant Supplement promptly after becoming aware of any Lien on any Receivable other than the conveyances hereunder or Liens permitted under Section 2.7(b).

(f) Continuous Perfection . Transferor shall not change its name, identity or structure in any manner that might cause any financing or continuation statement filed pursuant to this Agreement to be misleading within the meaning of Section 9-402(7) of the UCC (or any other then applicable provision of the UCC) unless Transferor shall have delivered to Trustee at least 30 days prior written notice thereof and, no later than 30 days after making such change, shall have taken all action necessary or advisable to amend such financing statement or continuation statement so that it is not misleading. Transferor shall not change its chief executive office, jurisdiction of organization or change the location of its principal records concerning the Receivables, the Trust Assets or the Collections unless it has delivered to Trustee at least 30 days prior written notice of its intention to do so and has taken such action as is necessary or advisable to cause the interest of Trustee in the Receivables and other Trust Assets to continue to be perfected with the priority required by this Agreement.

(g) Credit Card Agreement and Guidelines . Transferor shall enforce the covenant in the Receivables Purchase Agreement requiring the Credit Card Originator to comply with and perform its obligations under the Credit Card Agreements relating to the Accounts, the Credit Card Guidelines and with respect to Accounts arising under any Co-Branding Agreement, all applicable rules and regulations of VISA U.S.A., Inc. and MasterCard International Inc., except insofar as any failure to comply or perform would not materially or adversely affect the rights of the Trust or the Holders under any Transaction Document or the Certificates. Transferor may permit the Credit Card Originator to change the terms and

 

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provisions of the Credit Card Agreements or the Credit Card Guidelines in any respect (including the reduction of the required minimum monthly payment, the calculation of the amount, or the timing, of charge offs and Periodic Finance Charges and other fees assessed thereon), but only if such change is made applicable to any comparable segment of the revolving credit card accounts owned and serviced by the Credit Card Originator which have characteristics the same as, or substantially similar to, the Accounts that are the subject of such change, except as otherwise restricted by an endorsement, sponsorship or other agreement between Transferor and an unrelated third party or by the terms of the Credit Card Agreements.

(h) Receivables Purchase Agreement . Transferor, in its capacity as purchaser of Receivables from RPA Seller under the Receivables Purchase Agreement, shall enforce the covenants and agreement of RPA Seller as set forth in the Receivables Purchase Agreement if the failure of RPA Seller to comply with such covenants and agreements would (i) result in the occurrence of an Early Amortization Event or (ii) materially and adversely effect the amount or timing of distributions to be made to the Investor Certificateholders of any Series or Class pursuant to the Transaction Documents.

(i) Official Records . The resolutions of Transferor’s Board of Directors approving each of the Transaction Documents and all documents relating thereto are and shall be continuously reflected in the minutes of Transferor’s Board of Directors. Each of the Transaction Documents and all documents relating thereto are and shall, continuously from the time of their respective execution by Transferor, be official records of Transferor.

(j) Amendment of Organizational Documents . Transferor shall not amend in any material respect its certificate of formation or its limited liability company agreement without providing the Rating Agencies with notice no later than the fifth Business Day prior to such amendment (unless the right to such notice is waived by the Rating Agency) and satisfying the Rating Agency Condition.

(k) Other Indebtedness . Except as contemplated by the Receivables Purchase Agreement, the Transferor shall not incur any additional debt, unless (i) such debt is contemplated by the Transaction Documents, (ii) such debt is contemplated by the Receivables Purchase Agreement dated as of August 1, 2001 between WFN and WFN Credit Company, LLC, executed in connection with World Financial Credit Card Master Trust and World Financial Credit Card Master Note Trust or (iii) the Rating Agencies are provided with notice no later than the fifth Business Day prior to the incurrence of such additional debt (unless the right to such notice is waived by the Rating Agency) and the Rating Agency Condition is satisfied with respect to the incurrence of such debt.

 

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(l) Separate Corporate Existence . The Transferor shall:

(i) Maintain in full effect its existence, rights and franchises as a limited liability company under the laws of the state of its organization and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and the Receivables Purchase Agreement and each other instrument or agreement necessary or appropriate to proper administration hereof and permit and effectuate the transactions contemplated hereby.

(ii) Except as provided herein, maintain its own deposit, securities and other account or accounts, separate from those of any Affiliate of the Transferor, with financial institutions. The funds of the Transferor shall not be diverted to any other Person or for other than the corporate use of the Transferor, and, except as may be expressly permitted by this Agreement or the Receivables Purchase Agreement, the funds of the Transferor shall not be commingled with those of any other person or entity.

(iii) Ensure that, to the extent that it shares the same officers or other employees as any of its stockholders or Affiliates, the salaries of and the expenses related to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with all such common officers and employees.

(iv) Ensure that, to the extent that it jointly contracts with any of its stockholders or Affiliates to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among entities, and each such entity shall bear its fair share of such costs. To the extent that the Transferor contracts or does business with vendors or service providers where the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods and services are provided, and each such entity shall bear its fair share of such costs. All material transactions between the Transferor and any of its Affiliates shall be only on an arm’s-length basis and shall receive the approval of the Transferor’s Board of Directors including at least one Independent Director (defined below).

(v) Maintain a principal executive and administrative office through which its business is conducted and a telephone

 

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number separate from those of its stockholders and Affiliates. To the extent that the Transferor and any of its members or Affiliates have offices in contiguous space, there shall be fair and appropriate allocation of overhead costs (including rent) among them, and each such entity shall bear its fair share of such expenses.

(vi) Conduct its affairs strictly in accordance with its certificate of formation and observe all necessary, appropriate and customary corporate formalities including, but not limited to, holding all regular and special directors’ meetings appropriate to authorize all limited liability company action, keeping separate and accurate minutes of such meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, intercompany transaction accounts. Regular directors’ meetings shall be held at least annually.

(vii) Ensure that decisions with respect to its business and daily operations shall be independently made by the Transferor (although the officer making any particular decision may also be an officer or director of an Affiliate of the Transferor) and shall not be dictated by any Affiliate of the Transferor.

(viii) Act solely in its own legal name and through its own authorized officers and agents, and, except as contemplated by the Transaction Documents, no Affiliate of the Transferor shall be appointed to act as agent of the Transferor. The Transferor shall at all times use its own stationery and business forms and describe itself as a separate legal entity.

(ix) Except as contemplated by the Receivables Purchase Agreement, ensure that none of its Affiliates shall advance funds to it, and no Affiliate of the Transferor will otherwise guaranty its debts.

(x) Other than organizational expenses and as expressly provided herein, pay all expenses, indebtedness and other obligations incurred by it using its own funds.

(xi) Not enter into any guaranty, or otherwise become liable, with respect to or hold its assets or creditworthiness out as being available for the payment of any obligation of any of its Affiliates.

(xii) Ensure that any financial reports required of the Transferor shall comply with GAAP and shall be issued separately from, but may be consolidated with, any reports prepared for any

 

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of its Affiliates so long as such consolidated reports contain footnotes describing the effect of the transactions between the Transferor and such Affiliate and also state that the assets of the Transferor are not available to pay creditors of the Affiliate.

(xiii) Ensure that at all times it is adequately capitalized to engage in the transactions contemplated in its certificate of formation and limited liability company agreement.

SECTION 2.8 Addition of Accounts . (a)  Automatic Additional Accounts . Subject to any limitations specified in any Supplement, Automatic Additional Accounts shall be included as Accounts from and after the date upon which they are created, and all Receivables in Automatic Additional Accounts, whether such Receivables are then existing or thereafter created, shall be transferred automatically to the Trust upon their creation. For all purposes of this Agreement, all receivables relating to Automatic Additional Accounts shall be treated as Receivables upon their creation and shall be subject to the eligibility criteria specified in the definitions of “Eligible Receivable” and “Eligible Account.” Transferor may elect at any time to terminate the inclusion in Accounts of new accounts which would otherwise be Automatic Additional Accounts as of any Business Day (the “ Automatic Addition Termination Date ”), or suspend any such inclusion as of any Business Day (an “ Automatic Addition Suspension Date ”) until a date (the “ Restart Date ”) to be notified in writing by Transferor to Trustee by delivering to Trustee, Servicer and each Rating Agency ten days prior written notice of such election at least 10 days prior to such Automatic Addition Termination Date, Automatic Addition Suspension Date or Restart Date, as the case may be. Promptly after each of an Automatic Addition Termination Date, an Automatic Addition Suspension Date and a Restart Date, Transferor and Trustee agree to execute, and Transferor agrees to record and file at its own expense, an amendment to the financing statements referred to in Section 2.1 to specify the accounts then subject to this Agreement (which specification may incorporate a list of accounts by reference) and, except in connection with any such filing made after a Restart Date, to release any security interest in any accounts created after the Automatic Addition Termination Date or Automatic Addition Suspension Date. Notwithstanding the foregoing, no new account arising in the Valuevision International Inc. portfolio will be treated as an Automatic Additional Account if, as a result of doing so, the aggregate amount of Principal Receivables in Accounts in the [Valuevision International Inc. portfolio would exceed $10,000,000.

(b) Required Additions of Supplemental Accounts . If during any period of thirty consecutive days, the Transferor Amount averaged over that period is less than the Minimum Transferor Amount for that period, Transferor shall designate additional Eligible Accounts (“ Supplemental Accounts ”) to be included as Accounts in a sufficient amount such that the average of the Transferor Amount, computed by assuming that the amount of the Principal Receivables of such Supplemental Accounts shall be deemed to be outstanding in the Trust during each day of such 30-day period, is at least equal to the Minimum

 

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Transferor Amount. In addition, if on any Record Date the aggregate amount of Principal Receivables plus amounts on deposit in the Excess Funding Account is less than the Required Principal Balance, Transferor shall designate Supplemental Accounts from any Approved Portfolio to be included as Accounts in a sufficient amount such that the aggregate amount of Principal Receivables plus amounts on deposit in the Excess Funding Account will be equal to or greater than the Required Principal Balance. Receivables from all such Supplemental Accounts shall be transferred to the Trust on or before the tenth Business Day following such thirty-day period or Record Date, as the case may be. In lieu of, or in addition to, designating Supplemental Accounts as required above, Transferor may convey to the Trust participations or trust certificates representing undivided legal or beneficial interests in a pool of assets primarily consisting of receivables arising under revolving credit card accounts or other revolving credit accounts owned by Credit Card Originator or any of its Affiliates and collections thereon (“ Participation Interests ”). Any addition of Participation Interests to the Trust (whether pursuant to this paragraph (b)  or paragraph (c)  below) shall be effected by an amendment hereto, dated the applicable Addition Date, pursuant to subsection 13.1(a) .

(c) Permitted Additions . In addition to its obligation under paragraph (b) , Transferor may, but shall not be obligated to, from time to time designate Supplemental Accounts or Participation Interests to be included as Trust Assets, in either case as of the applicable Addition Date.

(d) Certain Conditions for Additions of Supplemental Accounts and Participation Interests . Transferor agrees that any transfer of Receivables from Supplemental Accounts or Participation Interests under paragraphs (b)  or (c)  shall occur only upon satisfaction of the following conditions (to the extent applicable):

(i) on or before the tenth Business Day prior to the Addition Date (the “ Notice Date ”), Transferor shall give Trustee, each Rating Agency and Servicer written notice that such Supplemental Accounts or Participation Interests will be included, which notice shall specify the approximate aggregate amount of the Receivables or Participation Interests to be transferred; and, in the case of any transfer pursuant to paragraph (c) , the Rating Agency Condition shall have been satisfied;

(ii) on or before the Addition Date, Transferor shall have delivered to Trustee a written assignment (including an acceptance by Trustee on behalf of the Trust for the benefit of the Investor Holders) in substantially the form of Exhibit B (the “ Assignment ”) and the Credit Card Originator shall have indicated in its computer files that the Receivables created in connection with the Supplemental Accounts have been transferred to the Trust and, within five Business Days thereafter, Transferor shall have delivered to Trustee an Account Schedule listing such Supplemental Accounts, which as of the date of such Assignment, shall be deemed incorporated into and made a part of such Assignment and this Agreement;

 

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(iii) Transferor shall represent and warrant that (x) each Supplemental Account is, as of the Addition Date, an Eligible Account, and each Receivable in such Supplemental Account is, as of the Addition Date, an Eligible Receivable, (y) no selection procedures believed by Transferor to be materially adverse to the interests of the Investor Holders were utilized in selecting the Additional Accounts from the available Eligible Accounts in an Approved Portfolio, and (z) as of the Addition Date, Transferor is not insolvent;

(iv) Transferor shall represent and warrant that, as of the Addition Date, the Assignment constitutes either (x) a valid transfer and assignment to the Trust of all right, title and interest of Transferor in and to the Receivables then existing and thereafter created in the Supplemental Accounts, and all proceeds of such Receivables and Insurance Proceeds relating thereto and such Receivables and all proceeds thereof and Insurance Proceeds and Recoveries relating thereto will be held by the Trust free and clear of any Lien of any Person claiming through or under Transferor or any of its Affiliates, except for (i) Liens permitted under Section 2.7(b) , (ii) the interest of Transferor as Holder of the Transferor Interest and (iii) Transferor’s right to receive interest accruing on, and investment earnings in respect of, the Excess Funding Account, or any Series Account as provided in this Agreement and any related Supplement or (y) a grant of a security interest in such property to the Trustee, for the benefit of the Investor Holders, which is enforceable with respect to then existing Receivables in the Supplemental Accounts, the proceeds thereof and Insurance Proceeds and Recoveries relating thereto upon the conveyance of such Receivables to the Trust, and which will be enforceable with respect to the Receivables thereafter created in respect of Supplemental Accounts conveyed on such Addition Date, the proceeds thereof and Insurance Proceeds and Recoveries relating thereto upon such creation; and (z) if the Assignment constitutes the grant of a security interest to the Trustee in such property, upon the filing of a financing statement as described in Section 2.1 with respect to such Supplemental Accounts and in the case of the Receivables thereafter created in such Supplemental Accounts and the proceeds thereof, and Insurance Proceeds and Recoveries relating thereto, upon such creation, the Trust shall have a first priority perfected security interest in such property (subject to Section 9-306 of the UCC), except for Liens permitted under Section 2.7(b) ;

(v) Transferor shall deliver an Officer’s Certificate to Trustee confirming the items set forth in clause (ii) ; and

 

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(vi) Transferor shall deliver an Opinion of Counsel with respect to the Receivables in the Supplemental Accounts to Trustee (with a copy to each Rating Agency) substantially in the form of Exhibit E-2 .

(e) Additional Approved Portfolios . As of the Effective Date, each of the Restatement Date Portfolios is designated as an Approved Portfolio. The Transferor may also from time to time designate additional portfolios of accounts as “Approved Portfolios” if all conditions, if any, in each Supplement for the designation of an Approved Portfolio are satisfied.

SECTION 2.9 Removal of Accounts . (a) On any day of any Monthly Period Transferor shall have the right to require the reassignment to it or its designee of all the Trust’s right, title and interest in, to and under the Receivables then existing and thereafter created, all moneys due or to become due and all amounts received with respect ther